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Exact Sciences (EXAS) Q4 Earnings and Revenues Rise Y/Y

Zacks Equity Research
·4-min read

Exact Sciences Corporation EXAS announced fourth-quarter 2019 results, wherein earnings per share (EPS) were 54 cents against a loss per share of 44 cents reported a year ago.

Yearly net loss was 64 cents per share, narrower than the year-ago loss of $1.43 per share.

Revenues in Detail

Following the completion of the Genomic Health business integration (completed on Nov 8), fourth-quarter consolidated revenues surged a stupendous 106.7% year over year to $295.6 million.

Exact Sciences Corporation Price, Consensus and EPS Surprise

 

Exact Sciences Corporation Price, Consensus and EPS Surprise
Exact Sciences Corporation Price, Consensus and EPS Surprise

Exact Sciences Corporation price-consensus-eps-surprise-chart | Exact Sciences Corporation Quote

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Screening revenues were $229.4 million, reflecting a year-over-year increase of 60%. Cologuard test volume was 477,000, up 63% year over year.

Average Cologuard recognized revenue per test was $481. Moreover, average Cologuard cost per test of $123 reflected an improvement of $6 per test.

Precision Oncology revenues were $66.2 million for the period between Nov 8, 2019, and Dec 31, 2019, following the closure of the Genomic Health buyout. Precision Oncology proforma revenues for the fourth quarter were $119.1 million, reflecting an increase of 14% from the year-ago period, given that Genomic Health was a stand-alone entity.

Oncotype DX test volume for the fourth quarter was 41,000, reflecting an increase of 14%.

Margin

In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 114.1% to $225.2 million. Further, gross margin expanded 263 basis points (bps) to 76.2%.

Research and development expenses rose 108.8% year over year to $43.2 million. Sales and marketing expenses rose 56.1% to $119.9 million, whereas general and administrative expenses grew 156.7% to $144.4 million year over year.

Adjusted operating expenses were $307.5 million in the fourth quarter, up 100% year over year. Adjusted operating loss totaled $82.3 million compared with the year-ago operating loss of $48.6 million.

Financial Update

Exact Sciences exited the year with cash and cash equivalents of $177.2 million compared with $160.4 billion at the end of 2018.

Outlook

The company anticipates revenues of $1.61-$1.65 billion for 2020. The projection includes Screening revenues and Precision Oncology revenues of $1.13-$1.15 billion and $485-$495 million, respectively.

The company's revenue guidance includes the yearly impact of collaboration with Genomic Health.

Our Take

Following the acquisition of Genomic Health, Exact Sciences registered strong year-over-year growth in revenues and earnings for the consolidated company in the fourth quarter. The company’s legacy Screening business registered robust growth on increased Cologuard volume. Expansion of gross margin in the reported quarter is encouraging as well.

However, rising expenses and loss from operations are concerning.

Zacks Rank and Key Picks

Exact Sciences currently carries a Zacks Rank #3 (Hold).

Some stocks, which reported solid results this earnings season, are Stryker Corporation SYK, Accuray Incorporated ARAY and ResMed Inc. RMD.

Stryker delivered fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Its fourth-quarter revenues of $4.13 billion surpassed the Zacks Consensus Estimate by 0.7%. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Accuray reported second-quarter fiscal 2020 adjusted EPS of a penny, whereas the Zacks Consensus Estimate was pegged at a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank #1 at present.

ResMed, with a Zacks Rank #1, reported second-quarter fiscal 2020 adjusted EPS of $1.21, surpassing the Zacks Consensus Estimate by 19.8%. Its revenues of $736.2 million outpaced the consensus mark by 1.5%.

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